The emergent solar markets of 2016

Where in the world is solar going? During 2016, prices fell, capacity expanded, and the future of photovoltaics is looking bright. In this article, Tom Kenning takes a look at solar expansion in Latin America, Africa, and Asia.

A bright future for the global energy transition (Photo by CT Cooper, edited, Public Domain)

Solar PV is no longer the domain of just a few developed countries after it saw significant progress in almost every continent on the planet in 2016. Only Europe, the original bastion of solar, has struggled to reignite its matured PV markets, but even France and Spain could be markets to watch out for next year, especially with Spain’s 3GW of solar and wind auctions due.

Latin America

Argentina kicks off: Argentina is a latecomer to the explosion of solar across the globe, having been tarnished with an awkward reputation among foreign investors and boasting just 8MW of PV installations to date. However, a new pro-business president, Mauricio Macri, and the launch of two well-handled large-scale tenders could catapult Argentina into a respected solar market. A previous attempt at tendering renewables in 2010 nose-dived with zero project completions, so the big question will be whether any of the latest awards can translate into solid projects.

Mexico boasts Latin America’s largest pipeline: Mexico continued its strong push for renewables following the liberalisation of its energy sector. With private entities now able to participate in the energy market, the country was able to hold its second long-term renewable power auction. After an impressive first auction, Mexico followed up with 2.4GW of solar in September’s round and PV is expected to continue winning large capacities in years to come. Mexico now has the largest contracted solar pipeline in the Latin American region. Ministry leaders have confirmed that the country’s third long-term power auction is scheduled for April 2017. The International Energy Agency (IEA) has also put out a special report predicting that Mexico will hit between 30-40GW of solar PV deployment by 2040 under various scenarios modelled.

Asia

Taiwan eyes 20GW: Taiwan looks set to break into the top 10 solar markets in terms of capacity additions around the world in 2017, according to EnergyTrend. The country’s solar deployment has been slow to kick off in comparison to its mature and bustling PV manufacturing industry. A year after a new government played its hand by targeting 20GW of solar by 2025 – driven by a desire to avoid adding more nuclear capacity – movement remains relatively pedestrian with 980MW of cumulative installations at the end of August. However, there is a strong short-term target to reach 1.52GW deployment within two years, including 915MW for rooftop and 610MW for ground mount. Much of the 20GW is likely to be set aside for utility-scale solar, but in one of the most densely populated countries in Asia, land acquisition will be a real challenge.

The Middle East

Jordan readies next large-scale tender: Jordan saw the commissioning and financing of multiple utility-scale projects, while also unveiling the Middle East’s largest solar plant. First Solar took centre stage by completing the 52.5MW(ac) Shams Ma’an PV project, but other developers can look ahead to the 300MW renewables tender announced by the government, of which 200MW will be for solar PV, again in the Ma’an area. Demand for power is growing in Jordan and solar can play a big role in adding to its generation capacity. Moreover, the country is actively upgrading its high voltage distribution network in order to integrate more renewable generation into the grid.

Africa

Nigeria signs first ever solar PPAs: The solar industry has often decried lengthy delays in the West African market. Time periods for signing power purchase agreements (PPAs) can stretch into years and this only makes financing more difficult with extortionate costs of capital from domestic lenders. However, July saw a cornerstone moment when state-owned power body, the Nigerian Bulk Electricity Trading (NBET), signed Nigeria’s first ever solar PPAs. This was no minor accomplishment given that they related to just under 1GW of solar PV projects to be implemented by at least 10 developers. Some developers are also managing to secure financing, so all eyes are on Nigeria.

Zambia sees lowest ever African solar tariffs: Zambia set a new benchmark for low-cost solar power in Sub-Saharan Africa in June with a competitive auction. The winners of the auction were Neoen and First Solar, who jointly bid at just US$0.0602/kWh, and Enel, which bid US$0.0784/kWh. The auction came under the ‘Scaling Solar’ programme, formed by a partnership between IFC and the World Bank. Under this programme, the pricing can be much more aggressive than under a less robust legal solution where more risks remain with the investor. Developers believe that if the regulatory framework remains favourable, Zambia could be a strong market.

Others

Markets that are already well established but are rising in prominence include Chile and India, which both continued to make great strides this year.

Tom Kenning is a journalist specializing in the solar energy sector, who has covered emerging markets in Asia, Africa, and Latin America for the last two years.

1 Comment

This is too unsystematic to be useful. Some markets like these progress in a given year, others hit problems like Brazil. There are two really important numbers: the overall balance and net growth, and the dispersion over all active markets (which controls the volatility of the whole). Germany for instance is now too small a share to affect the world total. But China’s dominance means that swings there do affect it.

The countries most worth watching IMHO for trendspotting are those where there is still a struggle going on between renewables and fossil fuels for new generation: Turkey, Germany again, South Africa, India, Australia, Philippines. Add Iran for the tradeoff with nuclear, as civilian nuclear is the cover story for the military plans. The USA will be where new renewables first cut into old fossil on economic grounds – the coal rundowns in China and the UK have been driven by politics.